ORCL Rising: FYQ2 Rev, EPS Beat; Q3 View in Line

By Tiernan Ray

Revenue in the three months ended in November rose 3%, year over year, to $9.11 billion, yielding EPS of 64 cents a share, excluding some costs.

Analysts had been modeling $9.01 billion and 61 cents a share.

New software licenses and cloud software subscription revenue rose a combined 17%, to $2.4 billion, the company said.

Oracle said the stronger U.S. dollar reduced profit by a penny per share, and that total revenue would have been 5% higher without the foreign exchange hit.

Oracle’s co-president Mark Hurd remarked that “Q2 performance was strong and broad based as all geographies reported double-digit revenue growth in new software license and cloud subscriptions.”

Hardware systems product revenue fell by 23%, year over year, to $734 million, both in constant-currency terms and reported terms.

Despite the decline in hardware, a persistent source of concern for Oracle investors, CEO Larry Ellison defended the products, remarking

Sun has proven to be one of the most strategic and profitable acquisitions we have ever made. Sun technology enabled Oracle to become a leader in the highly profitable engineered system segment of the hardware business. I believe that products like Exadata and the SPARC SuperCluster will not only continue to drive improved profitability in our hardware business, by the end of this fiscal year, they will also drive growth in our hardware business.

The company ended the quarter with $34 billion in cash and equivalents, it said.

Update: On the call, Oracle projected Q3 revenue to rise by 1% to 5% on a currency-adjusted basis, or 2% to 6% on a constant-currency basis. At the mid-point, that would be either slightly below, or in line with, current projections for Q3 revenue of $9.44 billion, representing a 4.1% growth rate. That depends on how many Street analysts have actually modeled for currency effects. EPS is seen in a range of 64 cents to 68 cents, on an adjusted basis, which is in line with the average 66-cent estimate.

Included in the projection is an expectations that hardware revenue will be flat down down 10% in the quarter.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.